Tesla’s position as the world’s top electric vehicle (EV) seller is under threat after a 1% drop in sales in 2024. The company delivered 1.79 million cars, compared to 1.8 million in 2023, marking its first annual sales decline in over a decade. Meanwhile, China’s BYD is closing the gap, reporting 1.76 million EV sales.
Tesla’s Sales Slump and Struggles
Tesla, under the leadership of Elon Musk, faced a significant dip in sales in 2024 despite multiple price cuts. The company’s sales drop of 1% resulted in 1.79 million cars delivered, falling short of previous records. This decline is a direct challenge to Tesla’s dominance in the global EV market.
Meanwhile, BYD, China’s leading electric automaker, saw rapid growth, selling 1.76 million EVs in 2024. The company’s total vehicle sales surged by 41%, largely driven by hybrid models, with most of the sales concentrated in China. The local market’s competitive landscape, government subsidies, and lower prices contributed significantly to BYD’s success.
Tesla has struggled in China, one of its key markets, due to fierce local competition and an ongoing price war. Additionally, weak demand in the US and Europe, combined with rising borrowing costs, has added further challenges.
Global Competition and Industry Challenges
Tesla isn’t alone in facing difficulties in the EV market. Traditional automakers like Volkswagen, Ford, and General Motors have also cut their sales targets or delayed investments in EVs. Analysts point to increased competition and Elon Musk’s polarizing political stance as factors affecting Tesla’s sales.
Despite a rebound in the last quarter of 2024, with a record 495,000 cars delivered, Tesla still missed its forecasted 500,000 deliveries. This miss led to a 5% drop in Tesla’s share price, despite a 60% surge earlier in the year.
Christopher Carey of the Carnegie Investment Council highlighted that failing to meet expectations can have a significant impact on companies like Tesla.
Government and Industry Actions to Protect Domestic Manufacturers
The EV industry is facing growing protectionism. Honda and Nissan are in merger talks to counter the competition posed by China’s car industry. Additionally, governments in the EU and the US have introduced tariffs to safeguard domestic manufacturers.
- EU: Imposed tariffs as high as 45.3% on Chinese EV imports.
- US: Introduced a 100% duty on Chinese EVs, with more tariffs expected under the new administration.
Despite these barriers, BYD continues its global expansion, facing some hurdles like a recent halt on its factory construction in Brazil. Brazilian authorities cited poor worker conditions, but BYD has since severed ties with the contractor and committed to complying with local laws.
Implications for the EV Market
The battle for dominance in the EV market is intensifying, with Tesla and BYD leading the way amid rising competition and shifting market dynamics. Tesla’s challenges, both domestically and internationally, will determine whether it can retain its position as the top EV seller, or if other brands will overtake it.